PERSPECTIVES

EXPLORING NATURAL RESOURCES

Our David Rossi discusses the challenges and opportunities in the natural resources industries.

David Rossi

Managing Director,
Global Natural Resources Lead
Accenture

You’ve recently taken on a new role as the global lead of Accenture’s Natural Resources industry group. What does that include? What makes it unique?
We’re dealing with the natural world—and some of the most essential materials in the global economy. So, we work with basic materials industries like mining, metals and forest products (paper, wood, etc.). But we also cover building products (things like cement, dimensional lumber and wallboard) and a wide range of packaging materials.

What unifies these companies is that they’re primarily dealing in mature commodity products, so they’re heavily influenced by macroeconomic factors impacting demand and price. They also run highly capital-intensive businesses. And the impact of the circular economy is felt very strongly: they must all heed the call for greater sustainability in the sourcing of raw materials. However, it’s worth mentioning that sectors like metals and forest products have a long history of recycling.

This isn’t to say every client is the same. Each sector has unique characteristics and agendas. For instance, because mining is a continuous process of harvesting non-renewable resources, it becomes ever more challenging over time. Miners have to go ever deeper or work with weaker ore bodies to get results. On the flipside, forest products businesses deal with fully renewable raw materials, so their challenges are completely different. It’s this variation that makes our work so interesting.

What are the most exciting opportunities facing companies in the natural resources industries?
I think workplace safety is a really exciting area right now. The goal of reaching zero harm is in sight. There are huge opportunities to use technology to eliminate injuries from the workplace, whether through autonomous operations, biometrics, analytics—or all three.

Analytics can of course be applied far more widely, and this is another vital trend about which companies should be aware. Much of this is about helping clients understand how to apply the analytics and adjust operating models to move decision making out to the edges of an organization. The productivity it brings is going to create incredible shareholder returns in coming years.

A final point is one that isn’t often associated with large natural resources businesses: customer intimacy. Business-to-business (B2B) customers are now demanding better e-commerce experiences, much like they are used to in their personal lives. So, companies are increasingly asking us to help them with this type of challenge. We’ll definitely continue to watch this trend.

What are the most pressing challenges facing companies in the natural resources industries?
Cyclical markets are a constant challenge. Even with advanced analytics, it’s difficult to accurately assess the severity and duration of each cycle. Deciding when, where and how much to invest is an ongoing problem with no easy answers.

Environmental regulation is another obvious hurdle for these industries. Investing in compliance can lead to significant “stranded capital”—in other words, investment that delivers no cost reductions or productivity boost. We see this happening in the move away from coal-fired boilers in the United States, for example.

Change management is also an emerging challenge. As companies move to more decentralized and agile structures, and mindsets transition from sweating assets to optimizing profitability, leaders will need to rethink how decisions get made in their organizations. Much more responsiveness is called for in the digital age.

Digital transformation is a hot topic across virtually all industries today. How is this affecting natural resources companies?
Much depends on the individual company and its leadership, financial health and competitors. That said, we encourage every business to follow a similar cycle of discovery, experimentation, evaluation and commitment. That means first understanding the broader digital landscape and then experimenting with different proofs of concepts to test the business appetite for digital transformation. That should be followed by a careful evaluation of the results and then the development of new organizational structures to cement the successes.

One other important point: businesses need to address anything that gets in the way of embracing digital transformation. That could be a naysayer in a critical role, a perception of too many competing initiatives or an ingrained wait-and-see culture—these and other obstacles just need to go. It’s time to accept that digital has arrived and that it’s changing the competitive landscape.

You come to your new role with extensive experience in the forest products industry. What makes that sector special?
Forest products is the only industry within our natural resources group with a truly renewable raw material—that makes it pretty special. And I’m pleased to say that responsible harvesting and replanting efforts are a cornerstone of the industry. But it’s also an industry that has gone through some tough times. Demand for printing and writing grades of paper continues to shrink. That’s led to significant closures and asset repurposing as white paper mills transition to board or tissue production.

What’s most interesting about this sector is that no two companies have the same recipe for success. We see some organizations working to improve core mill operations while others are looking to design the mill of the future. There is nothing to not love about that.

You’re a committed endurance runner outside of work. Can you tell us more about that?
Every year, I run a few marathons or endurance races for two charities that are near to my heart. For the past five years, I’ve organized an Accenture team to run the Hood to Coast relay race in Oregon. We’ve raised a significant amount of money for World Vision, an organization that funds fresh water projects in South Sudan.

I also typically run the Marine Corps and NYC marathons to raise funds for Friends4Michael, a charity started by one of my college roommates after he lost a teenage son to brain cancer.

Recognizing that I was not born to excel at endurance racing, you’ll often find me in a gym or out on a trail when traveling for work.

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